Iran war is making it harder for the Federal Reserve to cut interest rates

March 16, 2026

TL;DR

The Iran war is causing oil and gas prices to soar, potentially leading to broader inflation.
The Federal Reserve faces a conflict between controlling inflation and supporting a weakening labor market.
Economists are revising their interest rate predictions, with some now forecasting no rate cuts in 2026 or even potential rate hikes.
The Personal Consumption Expenditures index showed rising consumer prices in January, even before the impact of the Iran war on energy.
The Fed is expected to hold its benchmark rate steady at upcoming meetings in March and April.
The job market has shown signs of weakness, with job losses reported in February.
Kevin Warsh has been nominated to succeed Jerome Powell as Fed chair and may face inflationary pressures upon confirmation.

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